Acknowledgments At the outset, I sincerely thank IDE-JETRO for giving me an opportunity to visit Japan and be a visiting researcher at IDE. The IDE visiting researcher programme gives not only the much needed exposure and opportunity to work in Japan to young researchers but also helps them carry out their research in a congenial and friendly environment. Undoubtedly, the IDE visiting researcher programme is one of the best in the world. I hope to be associated with IDE in the future too. I sincere thank everybody at IDE for their kind support, cooperation and understanding during the course of my research. I am grateful to my counterparts Dr. Takeshi Inoue and Mrs Yoshie Shimane for their continued cooperation, inputs and guidance during the course of my study. It would not have been possible for me to complete my research without their support. I am also indebted to many other researchers at IDE, particularly South Asia Study Group, for their cheerful help and interaction during my entire stay. The IDE staff at the International Exchange and Training Division have not only helped me make my stay in Japan comfortable but many a times come to my rescue dealing with day to day matters. I can never forget their help. Moreover, I would like to thank Sakaguchi-san, Tsuneishi-san, Kenji-san and Manda-san who were a great support and I really thank them for everything. The best part of my visit was my continued interaction with many of the researchers at IDE and I gained and enhanced my knowledge in many aspects. －i－ Table of Contents Contents Page Acknowledgements……………………………………..…………………..……………..ⅰ Table of Contents …………………………………………………………..……………..ⅱ List of Tables………………………………………………………………..……………..ⅳ List of Figures …………………………………………………………………………….ⅴ Abstract …………………………………………………………………………………ⅵ. Introduction…………………………………………………………………………………1 1. Macroeconomic Performance and Infrastructure Development in India…………….. 3 2. Role of Infrastructure: A Brief Review…………………………………………………8 3. Transport Infrastructure in India: A Comparative Picture………………………………12 3.1 Roads……………………………………………………………………….… 12 3.2 Railways………………………………………………………………………. 14 3.3 Airways……………………………………………………………………… 15 3.4 Ports…………………………………………………………………………. 16 4. Transport Infrastructure in India:Development So Far……………………………… 18 4.1 Roads……………………………………………………………………………18... 4.2 Railways…………………………………………………………………………24.. 4.3 Airports……………………………………………………………………………30 4.4 Ports…………………………………………………………………………..…34.. 5. Major Issues in Infrastructure in India…………………………………………………40 5.1 Public Private Partnerships(PPPs)………………………………………… 40 5.2 Finances…………………………………………………………………….. 41 5.3 Fiscal Measures, Governance and coordination between the centre and the states……………………………………………………………….. 43 5.4 Land acquisition……………………………………………………………. 44 5.5 Land Acquisition Act in India……………………………………………… 44 4 －ii－ 5.6 Issues and Way Forward……………………………………………….…… 46 5.7 Environmental Issues……………………………………………………..… 48 6. Transport Infrastructure Development in Japan and Lessons for India………………50.. 6.1 Transport Infrastructure Development in Japan…………………………………50 . 6.1.1 Development of Railways……………………………………..….. 51 6.1.2 Road Sector………………………………………………….………51 6.2 Lessons for India……………………………………………………….…………52 . Concluding Remarks and Policy Suggestions…………………………………….…………56 References………………………………………………………………………………….58 The Author……………………………………………………………………………… 64 List of Major Works………………………………………………………………………65 －iii－ List of Table Page Table 1: Major Macroeconomic Indicators of India………………………………………. 3 Table 2: Infrastructure Facilities in India vis-à-vis Other Developing Countries…………. 4 Table 3: Infrastructure and Business Indicators of India, South, East and Southeast Asia (2007)………………………………………….……….. 5 Table 4: Summary of Infrastructure Access Indicators in India vis-à-vis Other Developing Countries, 2005……………………………………………….. 6 Table 5: Doing Business 2009 Rank……………………………………………………….. 6 Table 6: Infrastructure Development in India and China 2008……………………………. 7 Table 7: Estimates of Output Elasticity of Infrastructure Indicators………………………. 9 Table 8: Roads Transport in India: A Comparative Picture………………………………. 13 Table 9: Roads Transport in India: A Comparative Picture………………………………. 13 Table 10: Comparative Transport Infrastructure Indicators:Railways……………………. 14 Table 11: Comparative Transport Infrastructure Indicators:Airports………………………15 Table 12: Comparative Transport Infrastructure Indicators:Ports………………………… 16 Table 13: Ranking and Score of Global Competitiveness Index and Infrastructure : Quality Assesment of Selected Countries in Asia………………………………..17 Table 14: Plan-wise Development of Roads and Road Transport…………………………..20 Table 15: Targets and Achievements under 20-year Road Plans (length in km) ………… 21 Table 16: Plan-wise Addition to the Total National Highways Network………………… 22 Table 17: Shortfall in Funds for Road Maintenance in the Tenth FYP (Rs crore)………. 23 Table 18: Rail Infrastructure (April 2008)……………………………………………….. 26 Table 19: Railways Productivity Performance…………………………………………… 27 Table 20: Growth in Production and Railway Loading for Six Bulk Commodities (1991-2004) ………………………………………………………28 Table 21: Percentage of Total Traffic at the Top Six Airports……………………………..31 －iv－ Table 22: Market Share of LCCs in 2007-2008…………………………………………….32 Table 23: Projected Investment in Airports during the EFYP (Rs.billion at 2006-2007 price)……………………………………………….. 33 Table 24: Projected Investments by the Public and Private Sector in Airports during the EFYP (Rs. Billion at 2006-2007 price) ………………….. 34 Table 25: Non-Major Ports in India…………………………………………………………36 Table 26: Capacity and Traffic – Major Ports……………………………………………….36 Table 27: Average Turnaround Time (in days) …………………………………………….38 Table 28: Average Pre-Berthing Detention on Port Account (in hours)…………………....38 Table 29: Source of Finance for Major Ports…………………………………………………39 Table 30: EFYP Projected Investment in Ports by Category (Rs.billion at 2006-2007 price) …………………………………………………39.. Table 31: Infrastructure Investment as Percentage of GDP (%)……………………………41.. Table 32: Projected Shares of the Centre and States in Publeic Investment (%)…………….41 Table 33: National Infrastructure Investment Needs in Asia:2010-2020……………………42 Table 34: Infrastructure Investment Needs as a % of Estimated GDP 2010-2020…………42... List of Figures Figure 1: Total Road Length in India:1950-2004 ………………………………………….19 Figure 2: Railways as a Part of Total Transport Sector Investment (in Rs. Crore) ……… 25 Figure 3: Scheduled Domestic Passenger Traffic over the Past 10 Years (in million) .. 30 Figure 4: Trends in Scheduled Passenger Traffic (in million) ………………………… 31 Figure 5: Trends in Scheduled Passenger Traffic (in million)………………………….. 35 －v－ Abstruct India is one of the fastest growing countries in the world after China and needs to maintain its growth momentum in a sustainable manner to improve its overall standard of living and reduce poverty. Investment climate surveys like doing business in India repeatedly show that the limited and poor quality of infrastructure facilities act as a major impediment to business growth in India. In this context, the present study analyses the current status and issues related to India’s transport infrastructure, mainly roads, railways, airports and ports. Further, the study looks at development of transport infrastructure in Japan and draws useful policy lessons for India. The study finds that the major issues in infrastructure sector in India include financing of infrastructure, land acquisition and environmental clearances, private sector participation, stable policy framework, institutional set up, tariff policy etc. Given the limited resources of the government to finance the expected infrastructure investment, the environment for infrastructure development through both public and private investments needs to improve. This is possible only through providing a more stable and secure policy framework, protection of property rights and appropriate pricing and subsidy policies. Further, government may give guarantees and other forms of support to ensure confidence and viability for infrastructure projects to attract private investment. Government can also attract foreign investors in infrastructure sector by allowing foreign equity upto 100 % in almost all infrastructure sectors. To tackle the problem of infrastructure financing, the study proposes different ways to provide financing options to meet the huge infrastructure investment. The laws of Land acquisition need to be revisited to accommodate proper rehabilitation and compensation packages. The decentralized negotiation between the required bodies and land owners is the best option. Proper institutional set up for each transport infrastructure sector is necessary but efforts are needed for a coordinated approach among roads, railways, airports and ports so that interlinking of infrastructure services is effective and efficient. Since most of the infrastructure services are built by private operators through contracts, the design of the projects, estimation of cost and time etc ought to be done in a scientific manner to avoid delays and cost over runs. Overall, the Japanese experience of transport infrastructure development has good lessons for a country like India, particularly in areas of technology and efficiency, tariff policy, land acquisition, public-private coordination etc.. Though both the countries are at different levels of development, learning from Japan and taking appropriate policy measures